Bitcoins are generated by complex chains of interactions among a huge network of computers around the planet, and are not backed by any government or central bank, unlike traditional currencies.
Photograph: George Frey/Getty Images

Dutch police have arrested 10 people in the Netherlands as part of an international investigation into money-laundering through sales of the shadowy virtual currency bitcoin, prosecutors said on Wednesday.

Fifteen places were raided Tuesday in eight Dutch towns as part of the investigation, during which luxury cars, cash and the ingredients to make ecstasy were seized.

“Bank accounts and bitcoin accounts were also seized thanks to help from the United States, Australia, Morocco and Lithuania,” the Dutch prosecution service said in a statement.

The alarm had been raised by banks which had seen “large sums of money” being deposited before being immediately withdrawn at cashpoints. The amount of money involved was not revealed.

Criminals working in the shadows of the dark web – illicit sites trading in everything from firearms to drugs – are often paid in a virtual currency, known as bitcoins.

“Bitcoin trade is not regulated or monitored by financial authorities,” the Dutch prosecution service said.

“So it’s an attractive way for criminals to launder funds.”

Bitcoins are generated by complex chains of interactions among a huge network of computers around the planet, and are not backed by any government or central bank, unlike traditional currencies.

Its initial success has been met with a number of highly publicised setbacks.

Senior bitcoin developer says currency 'failed experiment'

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One of bitcoin’s biggest exchanges, the Tokyo-based MtGox, shuttered last year after admitting 850,000 coins – worth $480m at the time – had disappeared from its digital vaults.

Bitcoin’s reputation was also damaged when US authorities seized funds as part of an investigation into the online black market Silk Road.